Fenimore Asset Management, Inc. on Martin Marietta Materials, Inc.
Thesis
The aggregates industry benefits from local pricing power and attractive market structures. Higher borrowing rates have delayed construction, but Fenimore expects a multi-year infrastructure demand runway to support the business. The fund remains constructive despite increased energy costs and scrutiny of the Lhoist North America acquisition.
“we believe aggregates remain attractive businesses, supported by strong pricing power, favorable local market dynamics, and a multi-year infrastructure demand runway.”
Key risks
- Higher rates delaying construction and residential starts
- Higher fuel and energy expenses
- Scrutiny and execution risk surrounding the Lhoist acquisition